Practice Exercise 8-2 Date Account Titles and Explanation Debit Credit Nov. 30 D

Question

Practice Exercise 8-2

Date

Account Titles and Explanation

Debit

Credit

Nov. 30

Date

Account Titles and Explanation

Debit

Credit

Practice Exercise 8-2

Carla Vista Company sells one product. Presented below is information for January for Carla Vista Company.
Nov. 1 Inventory 260 units at $8 each 5 Purchase 170 units at $9 each 10 Sale 350 units at $18 each 15 Purchase 350 units at $8.50 each 21 Sale 380 units at $19 each 30 Purchase 400 units at $8.80 each
Carla Vista uses the FIFO cost flow assumption. All purchases and sales are on account.

Explanation / Answer

Nov 5: inventory(db) 170*9=1530
Accounts payable(cr)1530
Nov 10: account receivable(db) 350*18=6300
sales(cr)6300
Nov 15: inventory(db) 350*8.5=2975
Accounts payable(cr)2975
Nov 21:account receivable(db) 380*19=7220
sales(cr)7220
Nov 30:inventory(db) 400*8.8=3520
Accounts payable(cr) 3520
Nov 30:cost of goods sold(db) (260*8)+(170*9)+(300*8.5)=6160
invnetory(cr) 6160

Gross profit=sales-cost of goods sold
=(6300+7220)-6160=7360

Perpetual system:
Nov 5: inventory(db) 170*9=1530
Accounts payable(cr)1530
Nov 10: account receivable(db) 350*18=6300
sales(cr)6300
Cost of goods sold(db) (260*8)+(90*9)=2890
Inventory(cr)2890
Nov 15:inventory(db) 350*8.5=2975
Accounts payable(cr)2975
Nov 21:
account receivable(db) 380*19=7220
sales(cr)7220
Cost of goods sold(db) (80*9)+(300*8.5)=3270
Inventory(cr)3270
Nov 30:inventory(db) 400*8.8=3520
Accounts payable(cr) 3520
Gross profit= sales-cost fo good sold
=(6300+7220)-6160=7360

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